Public Procurement – improving value for moneyPublic Procurement – improving value for money

Nigel SmythNigel Smyth

Director, CBI Northern IrelandDirector, CBI Northern Ireland

5 March 20095 March 2009

Preparing for a new future Preparing for a new future

• Particularly challenging economic climate

• UK government finances in disarray – expect little, if any, growth in public expenditure post 2010/11

• Key driver - growth from private sector

• Maximise outcomes/value for money from public expenditure - £2.2bn public procurement budget likely to be a key target

Preparing for a new futurePreparing for a new future

• Leaner and fitter government – plus need for strategic outsourcing

• Must ensure savings do not come at the expense of Must ensure savings do not come at the expense of quality – avoid lowest cost, focus on valuequality – avoid lowest cost, focus on value

• Room for improvementRoom for improvement

• 60% of CBI survey respondents believe better value 60% of CBI survey respondents believe better value for money achievablefor money achievable

CBI Public Procurement SurveyCBI Public Procurement Survey

• Improving value for moneyImproving value for money

- Reducing bidding costs- Reducing bidding costs

Improving value for moneyImproving value for money

2001 Review of Procurement in Northern Ireland2001 Review of Procurement in Northern Ireland

““They (public procurement staff) need to be involved They (public procurement staff) need to be involved at an early stage to ensure they understand market at an early stage to ensure they understand market conditions, in particular cost drivers and latest conditions, in particular cost drivers and latest technology solutions; to identify risks and develop technology solutions; to identify risks and develop risk management strategies to draw up tender risk management strategies to draw up tender specifications which are output based and reflect specifications which are output based and reflect user needsuser needs””

Improving value for moneyImproving value for money

Dr DeAnne Julius’s Public Services Industry ReviewDr DeAnne Julius’s Public Services Industry Review

““Bid costs incurred by all parties should be reduced Bid costs incurred by all parties should be reduced by agreeing clear and consistent objectives, by agreeing clear and consistent objectives, simplifying documentation, reducing uncertainty simplifying documentation, reducing uncertainty around timing and engaging earlier, and more open around timing and engaging earlier, and more open communications about desired outcome and risk communications about desired outcome and risk allocation.”allocation.”

CBI Public Procurement SurveyCBI Public Procurement Survey

• Improving value for moneyImproving value for money

- Reducing bidding costs- Reducing bidding costs

- Government becoming a world-class client- Government becoming a world-class client

Government – a world class clientGovernment – a world class client

• a clear understanding of the objectives of the procurementa clear understanding of the objectives of the procurement

• a good understanding and knowledge of the supply markets – with a good understanding and knowledge of the supply markets – with processes in place to engage with the marketprocesses in place to engage with the market

• appropriate organisational capabilitiesappropriate organisational capabilities

• an efficient, cost effective, fair, robust and transparent tendering an efficient, cost effective, fair, robust and transparent tendering and evaluation processand evaluation process

• good feedback mechanisms, with appropriate mechanisms in place good feedback mechanisms, with appropriate mechanisms in place in event of disputein event of dispute

• effective contract management procedureseffective contract management procedures

CBI Public Procurement SurveyCBI Public Procurement Survey

• Improving value for moneyImproving value for money

- Reducing bidding costs- Reducing bidding costs

- Government becoming a world-class client- Government becoming a world-class client

- Improvements in information provision- Improvements in information provision

Challenges are not newChallenges are not new

• 2001 Review of Public Procurement – good 2001 Review of Public Procurement – good progress, but improvement needed on many issues progress, but improvement needed on many issues

• The complexity of EU rules does not make this easyThe complexity of EU rules does not make this easy

• Improving professional skills critical – “ Improving professional skills critical – “ the skills the skills needed to make and complete dealsneeded to make and complete deals””

• Constructive dialogue with CPDConstructive dialogue with CPD

Procurement – the bigger pictureProcurement – the bigger picture

• Not just about value for moneyNot just about value for money

• Sustainability moving rapidly up the agendaSustainability moving rapidly up the agenda

• CBI supportive – criteria must be relevant to the CBI supportive – criteria must be relevant to the contractcontract

• Must be an integral part of the projectMust be an integral part of the project

• Must focus on meaningful outcomesMust focus on meaningful outcomes

• Progress is being achieved Progress is being achieved

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